Judges’ hands tied by oil industry interests

Federal judges in gulf states have been extensively invested in the oil and gas industries for decades, and those interests threaten to create a logjam for the 150-plus lawsuits and legal challenges prompted by the BP spill.

Seven of the 12 federal judges of the Eastern District of Louisiana already have cited potential conflicts of interest in bowing out of cases brought by fishermen, charter operators, tourist services and families of those killed in the April 20 explosion of the Deepwater Horizon rig in the Gulf of Mexico.

Recusals in oil industry cases have become so common among the judges that the U.S. 5th Circuit Court of Appeals last month left in limbo a landmark case brought by Hurricane Katrina victims because the court couldn’t muster a quorum to review it. Eight of the circuit’s 17 judges stepped down because of financial interests in the oil, gas and chemical companies being sued for alleged culpability in global warming.

The 5th Circuit, encompassing Texas, Louisiana and Mississippi, would be the venue for the Obama administration’s expected appeal of Tuesday’s ruling by U.S. District Judge Martin L.C. Feldman of Louisiana that struck down the government’s six-month moratorium on deep-water drilling.

Feldman recently filed a financial disclosure statement for 2009, but it won’t be available to the public until the judge has a chance to request redactions, said Richard Carelli, spokesman for the Administrative Office of the U.S. Courts.

Documents for 2008 show that Feldman, 76, then had holdings in Halliburton and Transocean Ltd., two of the companies being sued in the Deepwater Horizon disaster. The 1983 appointee of President Reagan also owned, bought or sold stock in about 20 other oil and gas industry companies that year.

A Justice Department spokesman did not reply to a query about whether the government would seek Feldman’s recusal.

Judges are required by federal law to step down from cases in which they own even one share of stock in a company that is party to a case before them. None of Feldman’s 2008 holdings are known to include the oil service support companies that sought to quash the government moratorium.

As the gulf spill litigation moves forward, though, both federal district judges and those on the 5th Circuit appeals court will be called upon to decide whether their financial interests might cast doubts on their impartiality, legal analysts say.

“The 5th Circuit is unusual because this particular industry is so important there. I’m aware of no other circuit where you have a single industry that is so important and where there have been these systemic recusal issues,” said Arthur Hellman, a University of Pittsburgh law professor and federal judiciary expert.

Hellman predicted the oil spill cases would present the appeals court with difficulties similar to those in the Hurricane Katrina victims’ case. Many of the recent lawsuits have accused BP and its partners of negligence that led to the ongoing gulf leak, the worst offshore spill in U.S. history.

BP’s request to have U.S. District Judge Lynn N. Hughes of Houston preside over all pre-trial issues has stirred concerns about his impartiality, given his financial ties to the industry and close relationship with the American Assn. of Petroleum Geologists.

Legal analysts note, however, that the federal judiciary has options for overcoming both massive recusals and any feared appearance of a conflict.

“You can talk about transferring venue someplace else or have judges sitting by designation from outside the circuit,” said Charles Gardner Geyh, a law professor at Indiana University. “In a worst-case scenario, there is the rule of necessity, where if everybody is disqualified, then nobody is disqualified.…The system requires that somebody hear this.”

Russell Wheeler, a Brookings Institution scholar who studies judicial appointments and the federal courts, said the Judicial Conference of the United States was likely to come under pressure to devise new rules or recommendations for judges in the wake of litigation arising from incidents like the gulf oil spill.

“My sense is that judges really want to avoid these conflicts. It’s just one more hassle they have,” Wheeler said of the tendency of judges to err on the side of caution and step down.

carol.williams@latimes.com

Times staff writers Richard Fausset in Atlanta and Molly Hennessy-Fiske in New Orleans contributed to this report.